Hilary Receives $10,000 for a 15-Foot Wide Utility Easement Along

question 178

Essay

Hilary receives $10,000 for a 15-foot wide utility easement along one of the boundaries to her property. The
easement provides that no structure can be built on that portion of the property. Her adjusted basis for the property is
$200,000 and the easement covers 15% of the total acreage. Determine the effect of the $10,000 payment on
Hilary's gross income and her basis for the property.

---

Definitions:

Scope of Authority

The extent of powers given to an individual or a body, determined by an agreement, law, or rules governing their actions.

Agent

A person or entity authorized to act on behalf of another, often in a business or legal setting, to undertake specific actions or transactions.

Contract

A legally binding agreement between two or more parties that outlines obligations and rights of those parties.

Impliedly Warrants

Indicates that a warranty is given by implication, rather than expressly stated, based on the circumstances or nature of a transaction.